Crypto ETF filings amid market downturn

CRYPTO ETFS HOLD STRONG DESPITE BEARISH PRESSURE

ByMolly McNearney

Even as the cryptocurrency market struggles through another bearish phase, exchange-traded fund (ETF) issuers are continuing to move forward with new product filings. Rather than stepping back, asset managers appear to be betting that long-term investor demand for digital asset funds will remain intact.

This month alone, Bitwise Asset Management submitted paperwork for a Uniswap-linked ETF. Meanwhile, ProShares applied for leveraged Bitcoin and Ether ETFs, signaling confidence in continued investor interest. At the same time, 21Shares resubmitted proposals for ETFs tied to Ondo and Sei, indicating progress in expanding its crypto product lineup.

Long-Term Optimism, Short-Term Challenges

Todd Sohn, chief ETF strategist at Strategas, told Bloomberg that firms such as 21Shares and Bitwise remain focused on the long-term growth potential of crypto markets. However, he noted that sustained weak performance could impact investor flows in the near term.

While institutional players may remain committed to digital assets, retail and short-term investors often react quickly to volatility. If market conditions remain soft, new inflows into crypto ETFs could slow.

A Crowded and Competitive ETF Landscape

The crypto ETF market in the United States is becoming increasingly competitive. More than 140 crypto-focused ETFs are currently trading, with an additional 10 funds launched this year alone.

A BNB staking ETF is also expected to debut soon, adding another product to an already crowded space.

With so many offerings available, issuers must compete not only on performance but also on fees, structure, and long-term strategy.

Market Pressure Weighs on Investor Sentiment

Cryptocurrency prices have faced renewed pressure following October’s sell-off. Bitcoin has declined sharply, pulling smaller tokens lower as well.

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As liquidity tightens and broader risk appetite weakens, many investors are taking a more cautious stance toward digital assets. This risk-off environment has directly impacted ETF flows.

ETF Investors Sitting on Paper Losses

According to data from Glassnode, investors who bought U.S. spot Bitcoin ETFs are currently sitting on average unrealized losses. Many purchased Bitcoin at approximately $84,100 per coin, while prices are now hovering near $66,000.

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The downturn has triggered notable outflows:

  • More than $3.5 billion has been withdrawn from Bitcoin ETFs in recent months.
  • Over $1.5 billion has flowed out of Ether-focused ETFs.
  • These redemptions reflect investor caution as market volatility continues.

The Bigger Picture

Despite the recent downturn and significant outflows, ETF issuers are clearly positioning themselves for a longer investment cycle. The steady stream of filings suggests that asset managers believe digital assets will remain a permanent part of the financial landscape.

While short-term performance remains uncertain, the expansion of crypto ETFs indicates that the industry is preparing for the next phase of growth rather than retreating from the current downturn.

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